Oil prices were poised early on Monday to end July trading with the biggest monthly gain since January 2022, buoyed by tightening supply, expectations of record demand, slower inflation in the U.S., and a still resilient American economy.
As of Asian trading on Monday, both benchmarks were trading flat after another week of gains last week.
The U.S. benchmark WTI Crude was up by 0.04% early on Monday, well above the $80 per barrel mark, at $80.61. The international benchmark, Brent Crude, was slightly down from the $84.99 a barrel settlement on Friday, and traded at $84.93, down by 0.07% on the day.
Oil prices were headed for their strongest monthly gain since January 2022 and the best July performance in nearly two decades.
Oil is now at the highest levels since early April, pushed up by the OPEC+ production cuts which are tightening supply.
Demand, on the other hand, is not only resilient but headed for a record high in the coming months, according to analysts including Goldman Sachs and oil executives including ExxonMobil’s CEO Darren Woods.
The world will see a record-high demand for oil this year, Exxon’s top executive told CNBC on Friday.
In addition, the market expects Saudi Arabia, the world’s top crude oil exporter, and OPEC+ leader, to extend its 1 million bpd production cut into September, too. The Kingdom is cutting its production by 1 million bpd in July and August, on top of around 500,000 bpd reduction as part of the OPEC+ cuts that began in May. Russia has pledged a 500,000 bpd cut to August oil exports, and signs suggest Russian crude shipments are already falling.
The macroeconomic sentiment has also improved, with the recent inflation data from the U.S. showing slowing price increases and China expected to support its economy out of the slower-than-expected growth in the second quarter.